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Protecting Your Legacy for Future Generations
With a low income threshold of $12,750, income retained through an irrevocable Trust will be subject to the highest marginal tax rates. Trustees may want to reconsider investment options within the Trust. These might include municipal bonds, life insurance, etc. Another option to consider is to distribute income from the Trust to beneficiaries in lower income tax brackets, or “income shifting.”
Estate Planning Documents
The lifetime exclusion amount is now $11.4 million per individual for gifts and estates, but this increase may have unintended consequences for those with wealth just under that limit. It is just as critical to review estate documents and strategies and to plan for the transfer of assets of any sum. Strategies should not only consider all retirement/ insurance accounts and wills, but revocable Trusts, powers of attorney, and health-care directives. These should be reviewed every 2-3 years, after tax law changes, or after significant life events.
Retired IRA owners, (70 1/2 and older) could benefit from distributing charitable gifts from their IRA, tax free. As more retirees claim the higher standard deducation, they will only benefit tax-wise from making those charitable gifts by itemizing deductions. Keep in mind that proceeds must be sent directly to a qualified charity, and owners are limited to $100,000 annually. Also ask your CPA about “charitable bunching.”
Pro Tip for Our Clients
Be sure to always connect Hess-Verdon & Associates, PLC, with your acccountant to ensure nothing is missed regarding your 2019 taxes.
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We don’t want our clients, or their children and families, to go through that complicated and public litigation process, so we do all that we can to help them avoid it.